After your death, the terms of your trust are pretty much carved in granite. Even revocable trusts become irrevocable when the trust maker dies. Your trustee must either distribute all the trust's assets to beneficiaries immediately, or the trust will continue to operate so it can achieve the goals you set out in your trust documents.
For example, you might have written in spendthrift language because your son is your primary beneficiary, but you know he's not good with money. You can direct your trustee to mete out distributions to him over a period of many years rather than give him a large lump sum all at once. In such a case, your trust would continue to exist, at least during his lifetime.
If you set up an irrevocable life insurance trust instead, you may want all your beneficiaries to receive the death benefits immediately.
In this case, the insurance proceeds would be payable to your trust, your trustee would distribute the money to your beneficiaries, and the trust would then close. Whether your trust closes immediately after your death or lives on for a while to serve your intentions, it must eventually close. This typically involves payment of any outstanding debts or taxes before the trustee distributes the trust's assets and income to your named beneficiaries.
Hopefully, you chose a trustee who will follow your instructions, but if the trustee refuses, you can amend the trust to remove the current trustee and designate yourself as trustee. The trust was created by a written document, and the dissolution of the trust requires a written document. While your trust document no doubt consists of numerous pages, a revocation typically consists of less than one page.
The revocation will include the official name of the trust, the date of the trust, where the trust was created, the name of all grantors, and a statement to clearly indicate your intent to revoke the trust. The revocation document should be dated, and signed by all grantors before a notary public.
Look at your trust agreement to see how it was signed. The revocation should be done in the same manner. For example, if the trust agreement was signed by two witnesses and notarized, then the revocation should be signed by two witnesses and notarized. Once the revocation is executed, it is a good idea to make sure that certain parties are aware of the revocation. Therefore, you may wish to deliver a copy to any trustees or successor trustees designated in the trust agreement, and to any persons or financial institutions that were aware of the trust, such as banks and securities brokers.
If your beneficiaries are aware of the trust, you may also wish to provide them with a copy of the revocation. The revocation should be kept with the original trust agreement and your other important papers. In some states a revocable trust is registered with a court. If that is the case, the trust revocation document should also be filed with the court. This can be somewhat complicated, depending on whether the property was properly listed as owned by the trust and exactly what type of property is involved.
Distribute the property as indicated in the trust or your court order. Trust dissolution processes and related laws, such as property laws, vary by state. Consultation with a licensed attorney can ensure you are following the proper protocols for your specific region. Wanda Thibodeaux is a freelance writer and editor based in Eagan, Minn.
She has been published in both print and Web publications and has written on everything from fly fishing to parenting. As discussed above, irrevocable trusts are not completely irrevocable; they can be modified or dissolved, but the settlor may not do so unilaterally. The most common mechanisms for modifying or dissolving an irrevocable trust are modification by consent and judicial modification. Modification by consent occurs when all of the parties to the trust — the settlor and all beneficiaries — agree to modify the terms of the trust or revoke it.
This option requires the unanimous consent of all of the parties to the trust, even remote beneficiaries who have only a small chance of receiving assets from the trust.
It is also unavailable when the settlor is deceased, since a deceased settlor cannot consent to modify or revoke the trust.
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